Pirelli & C. S.p.A.

International Directory of Company Histories, Volume 75 (2004) by Andreas Loizou, David Salamie

Pirelli & C. S.p.A.

Pirelli & C. S.p.A.

Via Gaetano Negri 10 20123 Milan Italy Telephone: (02) 85351 Fax: (02) 8535-4426 Web site: http://www.pirelli.com

Public Company Incorporated: 1872 as Pirelli & C. Employees: 37,154 Sales: EUR 7.11 billion ($8.96 billion) (2004) Stock Exchanges: Milan Ticker Symbol: PC NAIC: 326211 Tire Manufacturing (Except Retreading)

One of the largest companies in Italy, Pirelli & C. S.p.A. is among the world's leading tire manufacturers, producing and distributing tires for cars, motorcycles, and farm and industrial vehicles. The world leader in tires for high-performance cars, Pirelli produces tires in 22 factories located in Argentina, Brazil, Egypt, Germany, Italy, Spain, Turkey, the United States, the United Kingdom, and Venezuela. Its marketing network covers 120 countries around the world, with about 14 percent of tire sales stemming from the home market, 45 percent from the rest of Europe, 7 percent from North America, 20 percent from South America, and the remaining 14 percent from Africa and the Asia-Pacific region. Among other operations, Pirelli is involved in real estate management, optical research relating to photonics-based telecommunications, and the development of alternative fuels from waste products, and it also holds a 57.7 percent stake in Olimpia S.p.A., which in turn is the leading shareholder of Telecom Italia S.p.A., one of Europe's largest telecommunications companies.

Late 19th-Century Origins

The company's founder, Giovanni Battista Pirelli, a 24-year-old engineering graduate from the Milano Politecnico, formed the company Pirelli & C. with an initial share capital of ITL 215,000. Pirelli had astutely realized that rubber was to become one of the most important commodities in the rapidly industrializing Italy. Less than a year after its inception in 1872, Pirelli's company built its first factory in Milan. There were 45 people employed in the small, 1,000-square-meter building as demand for the company's rubber sheets, belts, slabs, and vulcanized products increased. The rapid growth in the popularity of the motor car, which was now seen as more than a fashionable plaything for the rich, led to contracts to supply pneumatic tubes and transmission belts.

From its earliest years Pirelli demonstrated a willingness to diversify its product range and to produce overseas in order to satisfy its desire for ambitious, yet controlled, expansion. The company began the manufacture of insulated telegraph cables in 1879 and within seven years had developed the technology to produce underwater telegraph cables. In 1890 pneumatic bicycle tires rolled off the production line and were followed in 1901 by the company's first car tires.

Pirelli established a trend that many Italian companies were to follow when it began to expand abroad as early as 1902. The new cable and electrical lead factory set up near Barcelona in Spain was followed by a similar venture in Britain in 1914, and by 1920 factories had also been set up in Brazil, Greece, Argentina, Turkey, and Germany. Product diversification at home was encouraged by the firm's long-term commitment to investing in research and development. Giovanni brought his two sons into the business and they helped to run the new motorcycle tire production plant built at Bicocca in 1908. Forever at the forefront of new technology, the company began to produce rubberized fabrics as early as 1909.

Interwar and World War II Era

New factories were opened in Spain in 1917 and Argentina in 1919, but the first major event to affect the company after the end of the war was a change in its organizational structure, implemented in 1920. Pirelli & C., the original company founded by Giovanni Pirelli, changed its status and became an investment rather than a production company. Società Italiana Pirelli, later to become Pirelli S.p.A., was incorporated to act as a holding company to control the group's varied industrial operations based in Italy. Compagnie Internationale Pirelli S.A., incorporated in Brussels, was set up to manage the group's rapidly increasing overseas operations. Pirelli & C. S.a.p.A. was taken public in 1922; Pirelli S.p.A. was listed four years later.

In 1924 Luigi Emanueli, an employee of the company, developed the first commercially viable oil-filled cable. The world's first crossply tire, the Superflex Stella Bianca, was successfully launched in 1927 and within two years a new cable production unit was opened in Brazil and a new tire factory was opened at Burton-on-Trent in England. Initiatives were also made in India and Malaysia to guarantee the supply of natural rubber to Milan and Pirelli's overseas subsidiaries.

This was a period when Pirelli's products, fitted to the Ferraris and Alfa Romeos of Nuvolari and Ascari, became synonymous with success in international Grand Prix racing. Nevertheless, the rise of Mussolini's fascists and Italy's increasingly disastrous foreign policy in the mid-1930s led to a further period of economic and political turbulence. To counteract the impending threat of international boycotts, Compagnie Internationale Pirelli S.A. was transferred into Pirelli Holdings S.A., a holding company incorporated in neutral Switzerland, in 1937.